• July 24, 2014

Update (July 24, 2014): Target’s voyage to recoup money in connection with its nation-wide parking lot maintenance arrangement has been a two-year bumpy ride, as set out in the string of earlier posts below. Target brought the action originally on August 3, 2012.

Now what is left of Target’s lawsuit is scheduled to go to trial on August 11, 2014. Here is the litigants’ “joint introduction to the case.”

Something tells me that the struggle that Target faces between now and a verdict will be nothing compared to the challenges it will face collecting on a judgment if it succeeds in winning one. But this is sheer uninformed speculation.

Best of luck to all of the trial teams and stay tuned, Minnesota Litigator readers!

Update (November 4, 2013):  (under the subject line: Is the Road To (Financial) Ruin Paved With Litigation?): To date, it is looking like Twin Cities-based Target’s attempt to recoup from what it felt was a corrupt scam in connection with $100 million worth of parking lot maintenance contracts for Target stores nationwide has simply dug Target’s hole deeper with legal fees.  (Target’s efforts to amend its complaint a third time were recently rebuffed.)

Update (August 12, 2013):  (Under the subject line: A Civil Procedure Lesson: “Good Cause” for Leave to Amend After a Deadline Means GOOD CAUSE.):  After the deadline in a case’s scheduling order for amending a complaint, a party wishing to amend must show “good cause.”  This is not an empty formality.

To read the discovery schedule, this Court’s Order, and the Rules the way Target proposes would mean that adding substantive claims to the pleadings would be freely given all the way through the end of discovery, which would give no meaning to the motion to amend deadline, would give no purpose to Rule 16(b), and would severely prejudice the party defending the substantive claims because there would be no time left in the discovery period for it to seek discovery to prove up its defenses to the added claims. … Target has not given the Court a good reason to disturb the deadlines established by the Scheduling Order and as narrowly amended by the Court’s February 5, 2013 Minute Order.  In fact, Target has made no argument as to good cause whatsoever….

Target’s argument for why it should be allowed to amend its complaint after the court’s deadline included “at a minimum an overstatement, and at most entirely incredible,” U.S. Mag. Judge Jeffrey J. Keyes (D. Minn.) found in Target’s case against LCH, a paving consultant, and paving contractors who bid on performing various paving services for Target nationwide.

Original post (August 7, 2012) (Under the subject line: “A Lot of A Lot: $100 Million For Parking Lot Maintenance”):

“Economies of scale” underlie the success of all large companies.  If I had to pay someone to shovel snow off my sidewalk, I would not get as good a rate as I would be able to get if I were negotiating a single “sidewalk maintenance job” for all of the neighbors on my block.  The “per square foot” price for my small job that I would be quoted would probably be more than the “per square foot” I could negotiate for the far larger area.

Unfortunately, the “transaction costs” of collective action (that is, getting all the neighbors on board and keeping them on board) preclude me from being in a position to get the better “block price.”  (Fortunately, my teenage son cuts me a really good deal but I digress).

At a certain point, though, economies of scale are eaten away by “agency costs.”  For example, it is a lot easier for me to police the quality of snow removal (or other aspects of the job) of my own sidewalk than the larger area.  Or, to put it another way, it is easier to be cheated by vendors when you are bigger.

This principle may have played out in Target’s taking care of its parking lot maintenance.  It sought to realize the benefits of its huge scale to negotiate good deals but, it alleges, it was the victim of a complex multiparty bid-rigging rip-off scheme.

Something tells me they still paid less than I pay my teenage son to shovel but Target’s RICO lawsuit has been filed and is before U.S. District Court Judge John R. Tunheim (D. Minn.). [Editor’s note: Judge Tunheim recused himself and the case is now before U.S. District Court Judge Joan N. Ericksen (D. Minn.).]

Query:  What aspects of a business make it more or less able to realize economies of scale?  Why don’t we have law firms the size of Walmart, Costco, and Target?  Is there a single large firm of fiction writers anywhere in our economy?  If not, why not? Economies of scale outweigh agency costs in labor-intensive businesses but they are diminished to the extent that the “product” produced by the firm is complex and intangible.

 In the creative sector, workers are all entrepreneurs. Inventors, artists, graphic designers, software developers, and composers, are all taking high risks, since creativity does not depend on labor. Working a hundred times longer or even a thousand times longer in the creative sector, unlike working in non-creative laborious jobs, does not guarantee more profit than working for one hour.

Where do lawyers and law firms fit in this analysis?

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